Wednesday, July 16, 2008

Outsourcing, Layoffs Lead to End of Tax Breaks at Nielsen

Source : Click

IT offshoring deal leads to layoffs at ratings giant's global technology center.

The Nielsen Co. is giving up tax breaks that have netted it $1.4 million since 2001, in response to political fallout from an IT offshoring deal that has led to layoffs at its global technology center in Oldsmar, Fla.

Nielsen, which is best known for measuring TV audiences, began getting the tax breaks after agreeing to build the $100 million facility in Oldsmar, west of Tampa. The incentives were pegged to the number of jobs paying at least $52,000 annually at the tech center, which had about 1,200 employees at first and grew its workforce to 1,700.

In addition to the $1.4 million in tax breaks that Nielsen has received from the Oldsmar and Pinellas County governments, the company got $1.7 million from the state under an incentive program that has expired. The local incentives, though, were scheduled to continue until 2016.

But then last October, Nielsen announced a 10-year, $1.2 billion outsourcing agreement with India-based Tata Consultancy Services Ltd. That move was followed in April by the news that 117 people at the Oldsmar tech center would be laid off.

Although 50 of those employees have since been hired by Tata, Nielsen late last month said that it was cutting another 170 jobs in Oldsmar -- and that some of the affected workers are training Tata employees to do their work. The company now expects to have about 1,300 employees at the facility by year's end, plus 250 or so contract workers.

Gary Holmes, a spokesman for Nielsen, said the company decided to pull out of the tax-break program after members of the Oldsmar city council expressed "second thoughts about the agreement" because of the layoffs. "It became kind of an emotional issue," he said.

That's evident from the minutes of a council meeting held in April. One member accused Nielsen, the city's largest employer, of "making a joke of the tax- incentive program," while another said the company "had abdicated [its] responsibility as a corporate citizen."

Despite the layoffs, the incentive deal "did everything it was intended to do," said Mike Meidel, director of Pinellas County Economic Development. Nielsen could have built its technology center somewhere else, Meidel said, adding that the company still has enough employees in Oldsmar to qualify for the tax breaks.